Tissue Regenix Group Dual revenue stream growth

Tissue Regenix Group Plc (LON:TRX) has a broad portfolio of regenerative medicine products developed from decellularised human and porcine soft tissues for the wound care, orthopaedics, and cardiac markets. Since the launch of DermaPure, focus has been on expanding in the US wound care and orthopaedic markets: in August 2017, TRX acquired CellRight Technologies, bringing in synergistic bone regeneration technology. FY’17 results will be the first to reflect the acquisition and will include 5 months of the enlarged entity. The 1H’17 results presented here are for stand-alone TRX, and show organic growth, both from the EU jv and from DermaPure, to a £1.38m total.

Strategy: To build a regenerative medicine business with a portfolio of products using the proprietary dCELL platform; underpinned by compelling clinical and economic outcomes to drive higher adoption rates; whilst retaining the strategic and corporate flexibility that the three therapeutic corporate entities provide.

Interims: TRX reported 1H’17 results to end June 2017, not affected by CellRight, with sales beating our forecast by +£0.20m to £1.38m. Net cash was better than expected at £3.61m on 30th June, subsequently strengthened by the £40m capital increase for working capital and the acquisition of CellRight.

Sales: Both DermaPure (US) and GBM-V (jv in EU) sales were above expectations by around £0.1m each. Reported growth was +118% to £1.38m (£0.63m); note, there were no jv sales in 1H’16 and the accounting date changed. Transitioning to more in-patient activity saw underlying DermaPure sales grow +13% to $1.1m.

Acquisition: Post-period end, TRX completed the acquisition of CellRight Technologies in San Antonio, Texas for up to $30m/£23m, immediately giving greater exposure to the US orthopaedic market. TRX paid 3.8x prospective EV/
sales and 12.5x EV/EBITDA for CellRight, which has traded profitably since 2014.

Investment summary: Tissue Regenix Group Plc is building commercial momentum through three clear value drivers: sales of DermaPure in US; regulatory submission of OrthoPure XT in EU; and agreement of a joint venture for commercialisation of woundcare and cardiac products in Europe. CellRight will boost FY2017 and accelerate the time to reach sustainable profitability and cash generation.

Disclaimer

You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular stock, share, security, portfolio of securities, transaction, investment strategy, or other matter. We openly disclose that we and our contributors may have interests in investments and/or providers of services referred to within the website and that we receive remuneration from certain of the companies referred to on this website.